- Amazon plans to split a new second headquarters, known as HQ2, between Virginia and the Long Island City neighbourhood of Queens in New York City.
- Long Island City is a designated “opportunity zone,” a tax-benefit scheme introduced as part of the new US tax law.
- Opportunity zones are meant to encourage businesses to invest in low-income areas, but critics have pointed out that Long Island City is not low-income.
Amazon plans to split its new second headquarters, dubbed HQ2, between the Long Island City neighbourhood of Queens, New York, and Arlington, Virginia.
Reports emerged Wednesday that the Long Island City location could give Amazon and other investors in the area considerable tax breaks, as it is part of a so-called opportunity zone.
Opportunity zones were introduced as part of President Donald Trump’s new tax law, and they offer tax benefits worth potentially millions of dollars to companies for investing in low-income areas.
Some critics have questioned why Amazon’s new neighbourhood is eligible, as its median income is $US130,000. “All you have to do is look at the skyline from Manhattan,” the New York real-estate developer Don Pleebles told the Associated Press. “You can see billions of dollars of private investment there already … Long Island City doesn’t strike me as high on the list for needing extensive tax incentives to stimulate economic development.”
New York also offered Amazon incentives upward of $US1.5 billion to settle there, meaning it is effectively subsidizing each of the 25,000 jobs Amazon plans to create to the tune of $US48,000, according to Amazon’s HQ2 announcement.
Some opportunity zones merely border areas that might be low income, according to the New York Business Journal.
Using the tax benefits, Amazon may be able todefer=”defer”tax payments for years by investing its capital gains into an “opportunity fund” that can then be used to buy property in opportunity zones. Amazon will be eligible if it invests in public infrastructure, which according to its HQ2 announcement, is what it plans on doing.
Per its statement (emphasis ours):
“The community will benefit from New York City providing funding through a Payment In Lieu Of Tax (PILOT) program based on Amazon’s property taxes on a portion of the development site to fund community infrastructure improvements developed through input from residents during the planning process. Amazon has agreed to donate space on its campus for a tech startup incubator and for use by artists and industrial businesses, and Amazon will donate a site for a new primary or intermediary public school. The company will also invest in infrastructure improvements and new green spaces.”
Amazon did not immediately respond to Business Insider when asked whether the tax breaks had influenced its decision to settle in Long Island City.
Read more about Amazon’s HQ2:
- Amazon finally explains why it’s cutting its 2nd headquarters in half
- Amazon gained a huge perk from its HQ2 contest that’s worth far more than any tax break
- Arlington, Virginia, lured in Amazon with promises of a helipad and a cash grant of up to $US550 million
- Amazon is essentially creating a new neighbourhood in Virginia for its HQ2 – and people are confused
- Amazon is forcing New York and Virginia to help it build helipads in return for building ‘HQ2’ in their states
- We walked around Long Island City, the New York neighbourhood where Amazon is planning to bring HQ2, and saw why it’d be appealing to the e-commerce giant